There may not be an average or a typical number of employees in a company to require the services of an in-house accountant. The type of business can have a bearing on the need for accountants. The manager or owner of a small operation, with a handful of full-time workers, may not require additional personnel to tabulate the finances. Software, such as Intuit’s QuickBooks, FreshBooks, NetSuite, and FreeAgent can handle these functions. For payroll, software like Gusto, with a starting price of $45 a month, is a cost-effective way to manage compensation, health benefits, and workers’ comp.
An option for mid-size companies is to use a third-party accounting firm. By outsourcing, all of the accounting needs, it might save a company the salary and benefits of an employee. Some of the less complicated accounting work could be handled in-house, leaving the more sophisticated number crunching, such as taxes, to an outside firm.
Data from the U.S. Bureau of Labor Statistics (BLS) does not reveal the size of companies that have in-house accountants. The BLS does report that the majority of accountants and auditors work in – Accounting, Tax Preparation, Bookkeeping, and Payroll Services. There are 326,810 employees in this industry, followed by the Management of Companies and Enterprises sector with 98,100 accountants. From these May 2019 statistics, we surmise that most work for independent firms.
Not all mid-size and larger entities want to tackle the complexities of changing governmental financial regulations; therefore, an in-house accountant could be advantageous. A person(s) dedicated to handling all the accounting needs is readily available and accessible to management to deal with issues and problems immediately. For recent graduates with a bachelor’s degree in accounting, a review of employment websites should provide insight into which companies seek in-house talent in the accounting field.
The Small Business Administration (SBA) establishes size standards for what this government agency deems as ‘small.’ The number of employees varies by industry, as well as sub-sectors within a particular sector. For example, the Wholesale Trade subsector of Furniture Merchant Wholesales has a size of 100 employees to be a small business. The subsector of Aircraft Manufacturing indicates a maximum of 1,500 employees by the SBA to maintain the small size status.
A company with 100 full-time workers may prefer to perform all accounting work in-house, whereas 1,500 employees may decide that outsourcing is feasible. The type of business and government compliances may dictate whether an in-house accountant is best. Even a much larger furniture wholesaler would not have the same regulations as the aircraft manufacturer. The Federal Aviation Administration (FAA) regulates the safety and airworthiness of aircraft. Each design demands certification by the agency. The magnitude of standards refers to engineering and manufacturing regulations; however, these could affect the role of the accountant due to the diverse skills of employees. Different trades and levels of expertise create diversity in the compensation packages.
A 2016 article in the New York Times reported on the record number of acquisitions in 2015 that totaled $2.2 trillion in value. Billion-dollar corporations takeover other billion-dollar companies. One problem this creates is the merger of employees, specifically the amalgamation of another company’s finance and accounting department. The purchasing company must decide what the best number of full-time equivalents (FTEs) for in-house accounting is.
According to the American Productivity and Quality Center (APQC), which specializes in process and performance improvement, surveyed 1,209 companies in various industries. Its research concluded that the best performers need 4.8 FTEs per $1 billion in revenue to perform the accounting functions of the corporation. This metric does not answer the captioned query, but it does establish the optimum number. Interestingly, the APQC survey indicated that four times as many FTEs (per billion revenue) in accounting placed these companies in the worst category!
Conclusion
Regardless of the number of employees in a company, management should weigh the costs associated with hiring an in-house accountant or using an outside firm. The BLS reported the median income of accountants and auditors at $71,550 as of May 2019. As with most professions, densely populated cities with a higher cost of living have higher salaries. Not surprisingly, New York-Jersey City-Newark is at the top with an average of $102,090. Miami-Fort Lauderdale rounds out the top ten at $78,420. Tallahassee, Florida, pays $54,080 on average in this industry.
A company needs to add at least 20% for benefits on top of the base salary. Once the total compensation package is known, management and/or human resources should compare that expense to the fees associated with external accounting services. Outside fees might be on an hourly basis or fixed fee schedule, for example. Once the fee structure is known, the company or organization can estimate the number of hours or services needed with the firm to project the anticipated costs. This information allows a business to decide whether in-house or outsourcing is the most prudent expenditure.
Additional Resources
What Classes Will I Have to Take for a Degree in Actuarial Science?
What Are the Benefits of Pursuing a Degree in Actuarial Science?
What Are the Benefits of Pursuing an Associate’s Degree in Accounting?
What Are the Highest Paying Jobs With an Associate’s Degree in Accounting?